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Utility grabs ownership of green certificates in court battle
1 August 2001
A legal tug-o-war between the owner of the Haringvliet wind farm and a Utrecht utility over the plant's green certificates has ended with a court ruling in favour of local power company Eneco. The court's decision deals with a major area of confusion in the new green certificate system, which is intended to stimulate Dutch renewables production by allowing the consumer freedom to choose where to buy green electricity. The case is likely to be the first of many arising from ambiguities in the legislation governing the liberalisation of the Dutch green power market. Under the new legislation, which became effective on July 1 this year, renewable energy producers are said to generate two separate tradable commodities: physical power and green certificates equivalent to the power supplied to the net. Theoretically, the producer should be able to sell each of these commodities on separate markets and to separate parties. Like most privately owned wind farms, however, Windpark Haringvliet in Bunnik has a long term contract with its local power company -- in 1997 it signed a ten year contract for NLG 0.13/kWh excluding sales tax, with Eneco. And like most Dutch power companies, Eneco believes that it is paying for both the power and the certificates under such a contract. Regular "grey" power from the central pool costs an average of just NLG 0.08/kWh. Haringvliet argued that the existing contract makes no mention of certificates and that as the intention of the green certificate system is to stimulate renewables production, the financial benefits should go to the producer. The court found for Eneco on the grounds that without the certificates the power company could not re-sell the power as green electricity. In contractual terms, it ruled that the certificates should be regarded as an "unforeseen circumstance." At the same time it instructed the two parties to negotiate further on the price of the power supplied. According to the court, it will be impossible to assess the actual value of a green certificate until the market gets underway. During the proceedings, however, it emerged that the tax benefit to Eneco of a green certificate would be NLG 0.1285/kWh -- making a one MW certificate worth NLG 128.50. With Haringvliet producing some 8400 MWh a year, the total value of certificates should be in the region of NLG 1 million.
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